After a decline in first-half profit, the bank revealed a plan last month to aggressively expand lending to small and medium-size businesses in emerging markets by 45% over the next five years.

Some analysts say Standard Chartered would be better served by focusing on boosting return on capital—a measure of how well a company does on existing investments—which would reassure investors at a time when bad loans are on the rise.

“We believe shareholder returns at Standard Chartered could continue to be flat, as they have been for the last five years, if it continues to pursue a growth mandate,” Berenberg Bank analysts wrote in a note last week.

Once a darling of emerging-market bulls, Standard Chartered outperformed most peers in the decade until 2012, helped by strong economic growth in Asia, a weak U.S. dollar and robust asset growth. Though it has its headquarters in London, it draws around 90% of its operating profit from emerging markets and three-quarters of its revenue from Asia.

After gliding through the aftermath of the global financial crisis, the bank has been hurt as some of Asia’s key economies have slowed, driving up bad loans. Meanwhile, rivals have stepped up the competition for transaction services, one of the bank’s core offerings.

Net profit fell 24% in this year’s first half compared with the year-earlier period, and the lender is expected to deliver a cautious outlook when it updates investors later this month.

In Hong Kong, Standard Chartered’s shares have slumped 7.4% this year, while the Hang Seng Index has gained 3%. The bank’s London-listed stock was down 6.6% this year as of Monday’s close, while the FTSE 100 was up 10.3%.

Standard Chartered faces “a number of cyclical headwinds that are likely to put pressure on revenues,” the Berenberg analysts wrote, warning that the bank is vulnerable to a strengthening of the U.S. dollar, which would hurt earnings from emerging markets.

“We argue these [headwinds] could potentially lead to the company issuing new capital if it continues to pursue its growth strategy,” they said.

In an email, Standard Chartered indicated it was comfortable with its current focus. “We believe that the long-term fundamentals of emerging market economies, the underlying demographic processes, urbanization and industrialization are still driving GDP growth,” the bank said. “These economies don’t all rise and fall simultaneously.”

In citing challenges for Standard Chartered, analysts point to an end to the easy money that helped feed Asia’s economies and asset growth in recent years. Expectations that the U.S. Federal Reserve will soon begin winding down its monetary stimulus resulted in a reversal of capital flows from emerging-market Asia earlier this year, exposing weaknesses in many of the economies Standard Chartered depends on for earnings, and sending emerging-market currencies plummeting against the dollar.

The International Monetary Fund this month cut its 2013 growth forecasts for emerging Asia, slashing its outlook for Southeast Asia by six percentage points to 5.0%. India’s economy is now expected to grow by 3.8% this year, it said, down 1.8 percentage points from its previous forecast. Overall, Asia’s emerging markets are likely to grow 6.3% this year, it said, compared with the 6.9% it forecast as recently as July.

Barclays lowered its recommendation on Standard Chartered’s stock in August to “equal weight” from “overweight,” warning of the risk from slowdowns in countries such as Indonesia and India, given their large current-account deficits and heavy reliance on foreign capital.

Nonetheless, a strong balance sheet and signs of stabilization in Asia’s economies in recent months have supported some views that the worst may be over and that its earnings could surprise on the upside.

Citigroup’s analysts reiterated a “buy” rating on the stock this month.

But any significant turnaround in earnings will likely take a while. Bad debts grew 27% on year in the first half and will continue to weigh on profits. Loan impairments are tipped to rise in markets including India, while South Korea remains a trouble spot.

Standard Chartered’s margins are also being pressured by growing competition for one of the bank’s core offerings, transaction services, as big global banks and other regional lenders step up their efforts. Transaction banking involves meeting companies’ basic banking needs with services like cash management and cross-border transactions. While the margins are thin, growing volumes have made the sector more attractive at a time that investment-banking revenues suffer.

“Pricing pressure continues to come more from regional upstarts than traditional heavyweights,” J.P. Morgan analysts said in a note.